U.S. stocks were set to open modestly weaker Wednesday as investors continued to focus on tech sector weakness but also eyed developments in government bond markets ahead of what could be a key jobs report Friday and the Federal Reserve's final meeting of the year next week.
Futures tied to the Dow Jones Industrial Average were marked 38 points lower heading into the opening bell. Those linked to the broader S&P 500 were marked around 2.75 points, or 0.1%, to the downside amid selling in stock markets around the world that paralleled a dip in the U.S. dollar and a mini rally in government bonds, which saw benchmark German 10-year bond yields trade below 0.3% for the first time since September, extending a rally that has clipped 19 basis points from the proxy for risk-free borrowing costs in Europe since late October.
U.S. 2-year note yields rose to a nine-year high of 1.82% overnight before paring that move to 1.81% even as 10-year yields were largely unchanged at 2.34%, putting the difference between the two values at just 53 basis points, leading investors to worry if so-called "curve inversion," in which short term rates rise higher than longer-term ones, was taking place. The condition sometimes forecasts recession.
Investors got an early indication on the U.S. jobs report for November from ADP's private sector jobs reading on Wednesday, which showed a modestly better-than-expected 190,000 Americans found work last month, down from 235,000 in October, largely in education and health services and manufacturing.
The dollar index, which benchmarks the greenback against a basket of six global currencies and which slumped as much as 0.2% overnight, recovered to around 93.38, roughly the same level as it closed during the Tuesday session.
Home Depot Inc. (HD - Get Report) shares were active in premarket trading, falling 2.11% even as the home-improvement retailer reaffirmed its full-year sales and earnings guidance ahead of an investor day conference call from its Atlanta headquarters and outlined a $15 billion share buyback plan.
Dave & Busters Entertainment Inc. (PLAY - Get Report) shares were also active, rising 7.3% to potentially open at a three-month high of $56.75 after the group smashed Wall Street's estimates for its third-quarter earnings and said it will open more stores this year. Profit for the three months ended in October came in at 27 cents a share, the company said late Tuesday, up 8% from the same period last year and topping estimates of 24 cents. Sales were up 9.8% to $228.7 million, the Dallas-based company reported, even as the impact of hurricanes Irma and Harvey hit same-store sales and trimmed operating margins.
Investors were also focused on another major announcement in the healthcare sector, which saw UnitedHealth Group Inc.'s (UNH - Get Report) Optum combined DaVita Inc's (DVA - Get Report) medical unit in a $4.9 billion deal.
DaVita shares were marked 12.3% higher in premarket dealing in New York, indicating an opening price of $68.25, the highest since May 2. UnitedHealth Group shares traded modestly higher with an indicated opening price of $220.20, a move that would extend their three-month gain to 10.5%.
The deal is just the latest in unusual healthcare combinations. CVS Health Corp. (CVS - Get Report) this week said it will pay $69 billion to buy Aetna (AET) in an effort to offer more complete healthcare solutions to consumers.
Global oil prices were also heavy in overnight trading, held down by data from the American Petroleum Institute on Tuesday which showed a 5.5 million barrel decline in domestic crude stocks in the week ended Dec. 1, but a 9.3 million build in gasoline inventories, suggesting sluggish domestic demand heading into the holiday driving season.
Brent crude futures for February delivery were marked 1% lower at $62.18 a barrel while West Texas Intermediate crude contracts for the same month, the new benchmark contract, were seen 1.3% lower at $56.83 a barrel.
Stocks in Europe were firmly on the back foot for most of the session, with banks leading declines for benchmarks in Germany, were the DAX was marked 1% lower and slipped under the 13,000 barrier, and Britain's FTSE 100 fell as much as 0.2% before recovering to trade essentially unchanged from Tuesday.
The Stoxx Europe 600 banks index was marked 1.66% lower in early trading amid declines for Deutsche Bank (DB - Get Report) , Credit Suisse Group (CS - Get Report) , HSBC (HSBC) PLC and and Barclays PLC (BCS) .
Tech stocks were also trading weaker, continuing a trend which has unsettled markets for the past two weeks, with STMicroelectronics NV (STM - Get Report) marked 2.86% lower at €18.20 and Apple Inc. (AAPL - Get Report) supplier Dialog Semiconductor PLC (DLGNF) trading 3.12% lower at €24.22 each after Morgan Stanley cut the stock's outlook to "equal-weight". Infineon AG (IFNNY) , Europe's biggest chipmaker, slumped 1.3% to €22.50, the lowest since mid-October.
Overnight in Asia, a weaker U.S. dollar lifted the value of regional currencies and kept a lid of gains for export-related stocks while investors found themselves caught in the downdraft of yesterday's selling on Wall Street, which was fuelled in part by renewed weakness in the technology sector.
Collectively, the moves trimmed 0.23% from the MSCI Asia ex-Japan index, the region's broadest measure of share prices, and helped push the Nikkei 225 in Japan to a 1.97% slump -- the biggest since March -- that closed the benchmark at 22,177.04 points.
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